This case involves judicial review of the validity of an action taken by a Federal agency pursuant to a Federal statute, namely the issuance of a permit by EPA for a new sewage treatment plant in Fayetteville, Arkansas, issuance of a permit under the Clean Water Act.

And under that Federal statute, the permitting authority is to assure compliance with applicable water quality requirements, and this includes compliance with the EPA-approved water quality standards of a downstream State.

The key to this case in our view lies in appreciating the fundamental importance under the Federal statute of a rather elusive distinction, but one that is not formalistic, for reasons I will try to explain.

And that is the distinction between the law of the downstream State, and the federally approved water quality standards adopted by that State, but that apply in the permitting process as a matter of Federal law under the Clean Water Act.

The foundation on which we are building this distinction really is reflected in two of the holdings of this Court the last time it considered this general subject in International Paper Company against Oullette.

One of those holdings was that the downstream State's law is not preempted by the Clean Water Act insofar as it applies to sources in that State.

No State law is preempted as it applies within the State to sources in that State.

No Federal approval of such State law is needed.

It takes effect if it's enacted by the State.

The other foundation holding in International Paper against Oullette is that the Clean Water Act does preempt application of a State's law to discharges in another State.

So it's only if the out of State, the affected State, the downstream State's standards are approved by EPA, that they are to be applied in the permitting process in the source State.

And what is significant in the Federal act, and not emphasized in our brief as much as I think its significance would warrant, is that the Federal act in its implementing regulation require that certain processes be followed in the adoption or review of State standards if they are to qualify for EPA approval.

And the most relevant process that's required is requirements for public hearings and public participation, at which affected persons and States would have an opportunity to be heard about the impact of water quality standards on their operations.

And EPA itself is a very active participant in the development of these water quality standards.

It provides technical guidance through participation in these hearings, consultation, model regulations, et cetera, and moreover, a renewed opportunity to be heard.

In fact, the statute requires hearings every... to be conducted every 3 years to get public participation about needed revisions.

Unknown Speaker: Mr. Wallace, may I interrupt you and ask a question or two?

Here the EPA itself was issuing the permit?

Mr. Wallace: That is correct.

Unknown Speaker: And so you claim that under the statutory scheme that the Federal Government can have deference on its interpretation of the source State's requirements?

Mr. Wallace: As well as the affected State's.

Deference with respect to all applicable water quality standards that the Clean Water Act requires EPA to apply in issuing the permit.

Unknown Speaker: You don't... do you take the position that the source State's requirements, in this case, Oklahoma, become Federal law, in effect?

Unknown Speaker: The State where the source of the pollution enters the water, you say that State's laws become Federal laws?

Mr. Wallace: Well, the statute does require EPA to defer in administering its program to the source States where the discharge is occurring... here Arkansas... to the source State's interpretation of its own standards, because those standards are applicable as a matter of State law to anyone making a discharge in Arkansas anyway.

Unknown Speaker: Well, doesn't Oklahoma take the position that its no degradation policy means something different than the EPA says it means?

Mr. Wallace: That is correct.

But you see this Court already held in International Paper Company against Oullette that Oklahoma cannot apply its law to a discharge in Arkansas, that a State's law cannot apply to an out-of-State discharge, that the Clean Water Act preempts that.

What can apply, what does apply, are water quality standards that happen to be adopted in that State law that EPA approved after the Federal statutory processes were followed.

Unknown Speaker: Well, and as to that, Oklahoma has a different view than the EPA as to what those standards require.

Mr. Wallace: That is correct.

Unknown Speaker: So whose law do we apply?

Mr. Wallace: Well, that is precisely the point I'm trying to make, that it is EPA that is in... that is both the expert agency and the fulcrum agency to understand what informed participants in the processes that the Federal act requires would have thought those standards meant.

Otherwise the--

Unknown Speaker: Well, the EPA approved them, didn't it?

Mr. Wallace: --That's correct.

And the basis of that understanding.

Unknown Speaker: And I guess it's those standards are Federal law.

Mr. Wallace: That is our point.

It's only Federal law that can apply because State law is preempted from applying out of State.

Unknown Speaker: At what point could a court review, if at all, the adequacy and the correctness of EPA's interpretation of what the State standard meant?

When you first approved the implementation of the standard, or at the permit stage, such as we have here, or both?

Mr. Wallace: --The decision to issue a permit is subject to judicial review.

That is the proceeding that's before the Court.

Unknown Speaker: All right.

And that's usually for substantial evidence.

But what about--

Mr. Wallace: Right.

Unknown Speaker: --What about your interpretation and understanding of the Oklahoma statute.

Is that subject to any review in the courts?

Mr. Wallace: No, because the Oklahoma statute cannot apply to a discharge in Arkansas.

EPA is not applying an Oklahoma statute.

EPA is applying water quality standards that EPA approved that are reflected in Oklahoma statute.

Unknown Speaker: Well, they're still Oklahoma law.

I mean, they appear in an Oklahoma statute.

Mr. Wallace: They appear in an Oklahoma statute, and Oklahoma can apply that statute within Oklahoma.

But what EPA is applying is not Oklahoma law.

That's the fundamental error that the court of appeals made here.

The court of appeals said--

Unknown Speaker: Well, but under the permit procedure you were required to, I take it, evaluate the recommendations made by Oklahoma.

Mr. Wallace: --Exactly.

Unknown Speaker: And they were based on Oklahoma's law.

Mr. Wallace: They were based on what Oklahoma said was a misapplication of applicable water quality standards that the Clean Water Act required the permitting authority to apply.

Unknown Speaker: But the Oklahoma law must be referred to in order to understand the meaning of those water quality standards.

Mr. Wallace: Those water quality standards appear in the Oklahoma law.

That is correct.

Unknown Speaker: They also could be enforced by Oklahoma in Oklahoma.

Mr. Wallace: That's correct.

But when they're being enforced in the permitting process, under the Clean Water Act, they are not being enforced as Oklahoma law because the Court has already held that Oklahoma cannot apply.

Unknown Speaker: And from a legal standpoint, your interpretation of that law is never subject to review?

Mr. Wallace: It is subject to review, as to whether it was a reasonable interpretation of standards that the EPA was required to apply.

Unknown Speaker: Chevron deference applies?

Mr. Wallace: Absolutely, just as with any other standard that EPA had to apply in the permitting process.

Unknown Speaker: Mr. Wallace, that makes a lot sense when EPA happens to be the permitter, as is the case here.

But how does your very logical scheme work when, as is often the case, it is the upstream State that is the permitter?

Mr. Wallace: Because under the statute, if the downstream State is unhappy with the upstream State's issuance of the permit, its right is to complain to EPA, and EPA has the authority to veto that permit if EPA concludes that applicable water quality standards would be violated.

Unknown Speaker: And there's no deference to the upstream permitter.

Is that right?

Mr. Wallace: No, EPA has to make a determination.

EPA ultimately is the one who decides in these interstate disputes, whether the applicable water quality standards will be met.

Unknown Speaker: Mr. Wallace, is the reason that the... statutory basis for requiring application of the Oklahoma statute section 401?

Unknown Speaker: And specifically what I'm getting at is really the tail end of it.

In 401(b), which in effect provides that the permitting agency, based on the recommendations of such State, the administrator, et cetera, shall condition such license or permit in such manner as may be necessary as to ensure compliance with applicable water quality requirements.

Is that how the--

Mr. Wallace: Exactly.

Unknown Speaker: --Okay.

Mr. Wallace: That's exactly where the requirement comes in.

And that is the language we quote in our brief, the very language that you quoted, that the permitting agency is to assure that all applicable water quality requirements are to be applied.

Unknown Speaker: Now, is that consistent with what you described a moment ago as the holding in Oullette, which seems to suggest that indeed the only thing the downstream State really can do is to recommend within the meaning of section 402, and if the recommendation isn't taken, too bad.

Mr. Wallace: Well, we think that Oullette can be read consistently with this, if we understand what this recommendation means.

It really is a submission about what is the applicable water quality standard, what is the meaning of that standard that the permitting agency is required to apply.

But--

Unknown Speaker: Wouldn't it be a more natural reading, though, to say that the recommendation which is referred to in 402 is simply a recommendation for what the permit ought to include in order to meet the standard, but that under section 401(b) there is no question that the standard is enforceable.

And the only thing that may or may not be accepted under the leeway given on 402 is the recommendation on how to do it, how to meet it.

Mr. Wallace: --Well, I think that is our reading, that the water standard is enforceable.

Unknown Speaker: Well, then is that reading consistent with Oullette, which seems to leave the EPA with a much greater leeway?

Mr. Wallace: If Oullette is read that way, we think that's the wrong reading of Oullette.

Oullette says that the downstream State plays a subsidiary role in the process to the source State and the EPA.

Unknown Speaker: True, but section 401, if I understand it, provides that that role will not be subsidiary to the point of ignoring that State's requirement once it is... water quality plan, once it's been approved by EPA.

You can't--

Mr. Wallace: That is our position.

Unknown Speaker: --Okay.

Mr. Wallace: That is the difference between Arkansas and ourselves xxx this Court.

Unknown Speaker: All right.

Now, if that's the case and the Oklahoma water quality plan has got to be applied, then is the... is the relevant section of the Oklahoma plan what is set out on page 46 and 47 of the joint appendix, section 5, the beneficial use limitations?

Mr. Wallace: Well, it's the anti-degradation provision that was specifically at issue, and that was interpreted by EPA by the Chief Judicial Officer as being satisfied if none of the specific parameters of water quality set forth elsewhere in the water quality standards would be affected in any detectable way.

Unknown Speaker: Well, my particular problem, my reason for raising section 5, is that if section 5 is applicable... it says all streams and bodies of water designated as A, which I assume is applying here, are protected by prohibition of any new point source discharge.

This is a new... what is at issue here is a new point source discharge, and that would be absolutely prohibited if that section must be enforced in this case.

Mr. Wallace: Except under conditions described in section 3 that... this was interpreted by EPA which approved this as the water quality standard, as not meaning that any detectable discharge is prohibited, but meaning that any detectable impact on any of the water quality parameters set forth in describing the quality standards for Oklahoma waters would be violated.

Unknown Speaker: What it boils down to then, is that in order to sustain EPA, a court would have to say that the prohibition of any new point source discharge can be read to allow a new point source discharge if the effect of it is not detectable at the relevant point downstream.

That's sort of the nub of the reasonable interpretation issue, isn't it?

Mr. Wallace: That is correct insofar as to goes.

But when we're dealing with a new point source discharge 39 miles from the Oklahoma border, it must be remembered that Oklahoma has no authority to prohibit a point discharge in Arkansas.

The only discharge in Oklahoma is what ever effect appears at the boarder where the river reaches the border of Oklahoma.

And so from the standpoint of applying the Oklahoma in the interstate context, we're looking at what is detectable where there is what amounts to a discharge into Oklahoma by having the river flow into Oklahoma.

Now, I just want to say very briefly before reserving the balance of my time, that this is a very... a case of very practical significance.

There are 64,000 point source permits outstanding, which by statute are limited to 5-year terms.

So some 12,000 per year come up for renewal.

Many of the water quality standards, and each State has various water quality standards and classifies waters in various ways, are stated in narrative form rather than in numeric form, particularly the ones about aesthetics... taste, color, odor, and other aesthetic standards, as well as the anti-degradation policies.

All of these could be subject to second-guessing in judicial review proceedings in which a court would say that, well, whether EPA's interpretation was reasonable or not, it got this particular State's law wrong.

And what this State's law means is X.

Now, a State can be as idiosyncratic or quixotic as it wants to be within constitutional limitations in apply its law within the State, but it would frustrate the processes of the Federal statute to have this unpredictability.

And the Court in Oullette emphasized that predictability was the hallmark of the permit system.

I refer the Court to page 496 of the case, and would like to reserve the balance of my time.

Unknown Speaker: Very well, Mr. Wallace.

Mr. Warren, we'll hear from you.

Argument of Edward W. Warren

Mr. Warren: If I may turn very first off to Justice Souter's question regarding section 401(a)(2).

Justice Souter, the governing provision here for resolving interstate disputes is section 403(b)(5) of the statute.

Unknown Speaker: Will you tell us where in the appendix those are?

Mr. Warren: Yes, Mr. Chief Justice.

Section 402(b)(5) is found on page 168a, 169, and section 401(a)(2), as I think Justice Souter has already pointed out, is on page 166a.

One-sixty... 402(a)(3) is a provision left over from the 1970 act before the NPDES permit program was enacted in 1972.

Its purpose then and now was to deal with other Federal licenses, for instance, Corps of Engineers permits, FERC application for construction.

I think you can see that by reading the provision which has the anomaly in the context of an EP... EPA NPDES permit of having EPA recommending to itself.

The governing provision are... provisions are the dispute resolution provisions of section 402(b)(5), and they are applicable to EPA permits through section 402(a)(3), which says, the common-sensical outcome, which is that the same provisions, the same principles ought to govern whether the permit is issued by the State or whether it is issued by EPA.

Under the 402(b)(5) process, which the Court did interpret in Oullette, EPA is given the responsibility for resolving these interstate disputes.

And it can accept the recommendations of the permitting State, the source State, or it can accept the recommendations of the affected State, or it can split the difference in any way it chooses.

Unknown Speaker: May I interrupt you with this question?

If we start with the assumption that EPA has no control over what you referred to as possibly contradicting or inconsistent standards, as between upstream States and downstream States, that would make a lot of sense because you'd say at some point somebody's got to arbitrate between these differences, who better than EPA?

But isn't the assumption at least a strange assumption because EPA has got to approve these standards in the first place.

And if EPA is being given a standard by Oklahoma which, if applied, would clearly be inconsistent with what the upstream State is asking for in its standards, isn't the rational thing for EPA either to say no, we won't approve it because it's too tough in relation to what's upstream, or to say upstream, we won't approve yours because it's too weak in relation to downstream.

And isn't that the rational way, if we're going to have a national scheme or an interstate scheme, isn't that the rational way to resolve the differences between the States?

Mr. Warren: Justice Souter, what you say would be true if EPA had authority to disapprove any State standard as being too stringent.

EPA has no power to disapprove such a standard.

Unknown Speaker: Even insofar as it may have an interstate implication?

Mr. Warren: That's right, Your Honor.

If you... and if I can call your attention to page 25 of my brief, where we cite the EPA official pronouncement on this in the Federal Register where they say they don't have any authority to disapprove a State standard which is too tough.

That's also the holding of the one court that's reached the question in the Homestake Mining case.

Unknown Speaker: That's stated in the statute, isn't it?

Mr. Warren: Excuse me?

Unknown Speaker: That's just in the statute, isn't it?

I mean, doesn't this... this isn't just an administrative ruling.

Doesn't the Clean Water Act permit... itself permit the States to have stricter standards?

Unknown Speaker: But to the extent they impose more stringent requirements and the EPA approves their standards, I don't suppose to the extent that it's more stringent that Federal standards, I'm not sure that that part of the State plan is Federal law.

Mr. Warren: That's precisely right.

Those State standards, even after being approved, remain State law.

What we need and what we have in section 402(b)(5) is a mechanism to resolve those disputes.

EPA can decide whether to apply or how much to apply any downstream standard in the process of writing those permits.

Let me say that I believe the decision below must be reversed because it treated the Oullette decision as if it were dictum.

The Oullette decision is holding, and it controls the outcome of this case.

What the Court held in Oullette, and said in unmistakable terms, is that the downstream State has only and advisory role in regulating pollution which originates beyond its borders.

It can neither block a source State permit, nor regulate an out of source... directly.

Unknown Speaker: Well, in your view, would the EPA have had discretion to completely reject the Oklahoma standard?

Mr. Warren: Yes, Your Honor, it would have had that discretion if it has so chosen.

But its charge under the statute is to protect downstream water quality and to do what is... it believes in its judgment is appropriate to protect downstream water quality.

Unknown Speaker: And under 401, to ensure compliance with applicable water quality... quality requirements.

Mr. Warren: With those requirements which it concludes are applicable in order to protect downstream water quality.

Let me say, Justice Souter, my reading must be right, or else Oullette would not be right.

What this Court said in Oullette was that the Vermont nuisance remedies in that case were preempted because Vermont could, and I'm using the Court's words, could not do indirectly by nuisance remedies what it could not do directly.

That is regulate the conduct of out-of-State sources.

If Oklahoma can enact a no discharge standard, as it has done here... Justice Souter I think correctly read that prohibition.

If it can enact a no discharge prohibition and apply it to an Arkansas source, then it is doing directly through the statute precisely what it... the Court said it couldn't do in Oullette.

And indeed the very reason why the Court in Oullette held the nuisance remedies were preempted.

Unknown Speaker: All right.

Do you think there's essentially a contradiction... between 401 and 402, because 402 has a much more permissive sound if we read recommendation in the way you want us to read it.

401, however, which in the operative phrase refers to conditions such as may be necessary to ensure compliance with applicable water quality standards, you say is essentially weak provision because what is applicable is what EPA thinks ought to be applicable.

Isn't the more natural reading of 401's applicable water quality requirements in subsection 2, shouldn't it be taken as a reference to the enumeration of applicable statutory sections in subsection 1.

In other words, to ensure a certification that the discharge will comply with the applicable provisions of 1311 and so on through 1317.

Isn't that the more natural reading of the statute?

And if it is, 1313 is the one that refers to the approval of State plans, and that would pick up the State plan and make it enforceable.

Mr. Warren: But, first of all the State standards can't be disapproved, as I've said.

Secondly, I want to stress that 401(a)(2) is a provision that has an entirely different purpose and entirely different history, and 402(a)(3) makes clear--

Unknown Speaker: The trouble is it's still there, though.

Mr. Warren: --It's still there, but it has an application in this different context with Corps of Engineer permits.

But remember, this Court has long held that if a State... and that's what happening here, since there's no disapproval authority.

If a State is to regulate beyond its borders to control sources in another State, there must be unmistakably clear congressional intent to authorize that.

This is a cardinal principle of federalism.

We're talking about whether one sovereign State can regulate another sovereign State.

Unknown Speaker: Well if 401 were applicable, wouldn't you have that here?

Mr. Warren: No, I don't think you would, Your Honor, because I think the clear language of the statute is found in section 510, which is this provision in the statute that directly applies to this question.

That's the provision that preserves for the States their authority to enact more stringent requirements.

And it restricts those requirements to that State's waters and sources in that State.

If you look at that provision, I think you'll see it is intended to preserve the sovereign prerogative that... of Arkansas, really, which is what we're talking about here.

Arkansas, as a sovereign, in order to protect its waters, and in order to do what it wishes to do with its waters, needs to be able to regulate sources in Arkansas.

And those requirements of Arkansas can't be trumped by what is State law, Oklahoma law that EPA cannot disapprove.

What this Court addressed in Oullette is the proper way to resolve the question, and I would submit the controlling answer to the question.

Unknown Speaker: Thank you, Mr. Warren.

Mr. Butkin, we'll hear from you.

Argument of Robert A. Butkin

Mr. Butkin: Mr. Chief Justice, and may it please the Court:

Today, my State, Oklahoma, asks you to recognize the special protection the Federal law provides for very special living creatures called Outstanding National Resource Waters.

The one that's been presented to you in this case involves the scenic Illinois River, which enters the State of Oklahoma from the State of Arkansas, and courses about 60 miles in a southerly direction to Lake Tenkiller.

Oklahoma has designated its portion of the river an Outstanding National Resource Water, pursuant to the Clean Water Act.

We sent that designation up to Washington, and the EPA approved it and approved our water quality standard for that river as Federal law.

And our water quality for that river said no degradation, no discharge can be permitted into that river.

And once approved, pursuant to the Clean Water Act, that ceased to be only State law; that became Federal law, enforceable under the clear wording of the Clean Water Act.

Unknown Speaker: Subject to Oullette, I assume.

Mr. Butkin: No, Justice, we take--

Unknown Speaker: Not subject.

Mr. Butkin: --We think Oullette dealt with a different issue, the application of State law, State common law, to an out-of-State discharger, and Oullette recognized that the Clean Water Act prohibited downstream State law.

Oullette did not squarely face the issue of how federally approved water quality standards of the State should be enforced in a permit proceeding.

Unknown Speaker: But to get to that point, what Oullette did was in effect to analyze the... in effect, the structure of the statute in a way which is directly relevant to our question.

I don't see how we can hold your way without saying that Oullette's description of the way this statute worked was wrong.

Mr. Butkin: We would request the Court recognize that Oullette was limited to the narrow issue that was raised in the first sentence of its... of the opinion in that Court.

Unknown Speaker: So Oullette was wrong in the description of the structure of this statute?

Mr. Butkin: Yes, we think that EPA has an absolute obligation to enforce federally approved water quality standards.

The statute works in a slightly different way with source States and downstream States.

Source States do have an absolute veto power over a Federal permit.

Downstream States do not have a veto power, but if their federally approved water... their water quality standards have been approved by the EPA, those standards become enforceable under the clear wording of the statute.

Unknown Speaker: Well, you say if they've been approved by the EPA as though the EPA can make all this reasonable.

But the statute prohibits the APA... the EPA from making all this reasonable because it says that the State can... in section 510, that nothing in the chapter shall preclude the right of a State to adopt or enforce any standard or limitation regarding discharge of pollutants.

Mr. Butkin: Justice, I disagree with that.

Unknown Speaker: So when you combine the two principles, it means APA must approve it and then APA must... EPA must enforce it against another State.

Mr. Butkin: Oklahoma would disagree with that.

510 is a savings clause only that says nothing about the creation of federally approved water quality standards.

Section 303 is the operative provision in this case.

And under section 303, Oklahoma sends up its proposed or adopted standards that must meet minimum Federal requirements.

The EPA reviews them, and if they find the standard consistent with the act, the EPA approves them.

If they have some concern, the EPA sends it back and says change this, change that.

Once approved, pursuant to section 303, those standards cease to be State law only, and they become Federal law.

And the reason is very--

Unknown Speaker: Excuse me.

May I interrupt you?

Does EPA have an authority as broad as the one I was suggesting a moment ago your opposing counsel, of saying you know, this is too tough because, if enforced, it's going to be too restrictive on the upstream States.

Even though it's a great plan and it might be nice if it were simply an intrastate issue, we won't approve it for that reason.

Does EPA have that much authority in 303?

Mr. Butkin: --Justice, I think Congress made the tough call.

I don't think EPA can say it's too tough because I think the whole statutory scheme focuses or contemplates on these federally approved water quality standards being enforced to avoid a situation where State boundaries serve as artificial barriers to the achievement of the State's goals.

As EPA below recognized, and they told us, that if Arkansas' interpretation of the statute was adopted, you'd have a situation where water quality would be set by the lowest common denominator.

The downstream States would invariably be frustrated in their efforts to achieve their goals--

Unknown Speaker: But on your theory, it's set by the highest common denominator.

Mr. Butkin: --Absolutely.

Absolutely.

Unknown Speaker: All right.

And your answer to the objection, if it is an objection, is that it's up to EPA to decide how high that denominator's going to be.

Mr. Butkin: Right.

And that gets us to our next issue.

In this case, there are no degradations of standard was not a higher standard.

We modeled it after the Federal model.

The Federal Government requires each State as part of the Federal program, as part of their water quality standards to send up a anti-degradation standard.

And it says, States, when you decide that rivers are so important to you that they should be considered Outstanding National Resource Waters, you must require no degradation of such a water.

We sent that up for the Illinois River, and they approved it.

EPA had previously told us how under Federal law that standard should be interpreted.

In 1979, the EPA said when you have an Outstanding National Resource Water, you don't let any more discharges into such a water.

You don't--

Unknown Speaker: May I interrupt you, Mr. Butkin?

Just forgetting the specific statutory provisions for a minute, is the thrust of your argument... is the practical effect of your argument mean a tributary of the Illinois River that happens to be located in Arkansas may not grant a new permit to any source that would not satisfy the standards applicable to the Illinois River?

Mr. Butkin: --Yes, if those pollutants enter our State.

Unknown Speaker: Yeah.

Well... if those pollutions enter... what if they prove they don't which I think they almost did here?

Mr. Butkin: If there's no finding of a fact below that the pollutants in fact stream across the State border, there'd be no problem.

Unknown Speaker: So if they made a finding that there wa no detectable pollutant at the State border, that would be enough--

Mr. Butkin: No, Justice, they made a finding... I'm sorry.

They made a finding that for every 100 pounds of phosphorous sent towards Oklahoma, 25 percent would reach the State of Oklahoma, a finding of fact not contradicted by any party.

They made a finding that phosphorous in this particular river system--

Unknown Speaker: --I don't want to get into an argument about the facts.

I just want to understand your theory.

Is it your theory that at the point at which the river crosses the State line, the Arkansas tributary must conform with the Illinois River standard?

Mr. Butkin: --Federally approved water quality standards, because--

Unknown Speaker: Well, the one... no degradation.

Mr. Butkin: --That's right.

Unknown Speaker: And if it does conform with that, it may... the permit may be granted, even though there's a lot of pollution that dissipates on the way to the State line.

Mr. Butkin: The permit must be prohibited in this case if any new discharge reaches the river.

It depends on the--

Unknown Speaker: Well, that's what want to know--

--Reaches Oklahoma.

Mr. Butkin: --Reaches Oklahoma, I'm sorry, Justice.

Unknown Speaker: I see.

But as long as none of it reaches Oklahoma, no detectable amount reaches Oklahoma, then it would be permitted.

Mr. Butkin: If no measurable amount of pollutants, in this case, reached Oklahoma.

In this case, there was a finding that in fact measurable amounts did reach Oklahoma.

The administrative law judge applied a test in this case, Justices, that was totally consistent with how this same Federal standard has been interpreted.

And if I may, as early as 1979, the General Counsel of the Environmental Protection Agency say for a federally protected Outstanding National River, like the Illinois, for Federal law purposes, we do not permit any new pollutant load.

We don't permit any more waste to enter such a river.

We don't worry about the impact of this or that.

We... it's a given when you add new pollutants to that river, you're degrading that river.

There's a town called Tahlequah, Oklahoma, it's about 3 miles west of the Illinois River... same river, same water quality standard.

It discharges its waste through a tributary, not directly into the river, through a tributary that reaches the river.

EPA in 1986 said to Oklahoma, if you increase the pollutant load to that river, if you add more phosphorous to that same river, you are violating that Federal water quality standard.

And Oklahoma agreed because there was an uncertainty about whether they entered the protected part of the river.

Unknown Speaker: Mr. Butkin, but when the Federal Government designates a river as an Outstanding National River, presumably all States have a say in that.

But when Oklahoma chooses to do so, despite other States upstream, only Oklahoma has to speak.

Now you say that the approval is under section 133?

Mr. Butkin: No, 303.

Unknown Speaker: 303?

What power would EPA have when Oklahoma comes in and says we want to make this and Outstanding National River, to say well, gee, you know, there are other States upstream whose people are using this water, and we just don't think it's realistic to make this and Outstanding National River.

Mr. Butkin: Congress, we feel, addressed that and said in 301(b)(1)(C), you must enforce all applicable water quality standards with no room for a balancing test.

Unknown Speaker: No... who cares what anybody up river thinks?

We're our own State, and we're going to make this and outstanding national river, and nobody upstream can use it.

That's what Congress enacted.

With nobody, the Federal Government and the other States having nothing to say about it.

Mr. Butkin: The other States do have something to say about it because the law requires that Arkansas and upstream States be permitted an opportunity to appear at our rulemaking proceedings in the development of these standards.

Unknown Speaker: Wait... in Oklahoma's rulemaking proceeding.

Mr. Butkin: That's right.

Unknown Speaker: As supplicants to Oklahoma saying please don't make this an outstanding national river because we have people upstream who want to use this water.

Unknown Speaker: Well, can they also be supplicants as to EPA's approval?

Mr. Butkin: --That's right.

That's right.

Unknown Speaker: What is the process whereby a single State designates a river as an Outstanding... what is it, Outstanding Natural Resource?

Oklahoma would simply go to the EPA?

Mr. Butkin: No, Oklahoma has its own Scenic Rivers Commissions that have inventoried the rivers and picked five truly outstanding rivers in the State to so designate.

Unknown Speaker: Well, is there any supervision of that process by EPA?

Mr. Butkin: By that... by EPA, no.

However the Department of Interior has designated the river since 1967 as a potential national scenic river.

Unknown Speaker: So Oklahoma's completely on its own when it says the Illinois River in Oklahoma is a ONR.

Mr. Butkin: That's right.

That's right.

Unknown Speaker: Well, isn't that... I'm sorry.

Isn't that inconsistent with the answer that you just gave to me when you... I thought you said that there was a point at which in that process the upstream State could be a supplicant to EPA.

But that's just not so.

Mr. Butkin: Well, the upstream State can make its wishes known to Oklahoma during the--

Unknown Speaker: It's a downstream State.

But EPA doesn't have a role in this.

Mr. Butkin: --And I would presume that they--

Unknown Speaker: Isn't that correct?

I just want to make sure I understand what you're saying.

Mr. Butkin: --The upstream State can make its wishes known to the downstream State.

And I would presume the upstream States and all States can make their wishes known to EPA, also.

Unknown Speaker: Yeah, but EPA does not have dispositive role in the decision on this question.

Isn't that so?

Mr. Butkin: Not until they approve the standard as a for the no degradation policy.

But EPA requires--

Unknown Speaker: No, but when you're talking... if I understand you, you're talking about two different things.

We're talking about designation of rivers, on the one hand, and water quality standards on the other.

River designation, EPA doesn't have a dispositive role.

Mr. Butkin: --That's correct.

Unknown Speaker: So the upstream State is nothing but a supplicant to the downstream State, on your view.

That's the best it can do.

Mr. Butkin: In terms of the development of the water quality standards--

Unknown Speaker: No, no, no.

On the designation of the river.

Mr. Butkin: --No, the designation of the river, that would be correct.

Unknown Speaker: Well, if the designation of the river is operative, that's the end of the game.

Because if that controls, then it doesn't do them much good to have a role as objectors with respect to water quality which is intended to satisfy or to preserve the status of the river which is now binding upon everybody.

Mr. Butkin: But remember, EPA, the statutory scheme and regulatory scheme requires us to so designate these rivers.

We must inventory our rivers.

We must designate outstanding rivers, and once those are approved--

Unknown Speaker: Maybe you must, but isn't it true that on the analysis you've just given us, once the river is designated, that's basically the end of the game, so far as what the upstream State can reasonably expect to be allowed to do in the future.

Everything hinges on the designation of that river.

Mr. Butkin: --That's right.

Unknown Speaker: Okay.

How come the EPA issued this permit?

Because they found there wouldn't be any measurable degradation?

Mr. Butkin: The EPA issued this permit because they found there were no impacts other than the crossing of the pollutants into the river.

We think there is an internal contradiction in that finding because the EPA also made a finding that phosphorous controlled algae growth in this particular river.

We think it's important the Federal law, though, be applied consistently.

And here EPA below did not construe any authority to--

Unknown Speaker: Well, what do you think it meant by no detectable or measurable... degradation?

Mr. Butkin: --Justice, I think they were turning... I think they meant something other than the phosphorous coming in... a nuisance, a harm to a particular use, bass fishery, recreation, and so forth.

Unknown Speaker: Well, they purported to be construing your standard, which is Federal law.

They... and they thought, as construed by them, this permit should issue because there wasn't any harm to your water.

Isn't that right?

Mr. Butkin: Yes, that's right.

Unknown Speaker: And you disagree with them on that finding.

Mr. Butkin: Right.

And we think they made a big mistake for two reasons.

One is they--

Unknown Speaker: Well, you agree, though, that they have the... they have the authority to construe your standard as Federal law?

Mr. Butkin: --I do, however, I think the plain meaning--

Unknown Speaker: Now wait a minute.

Let's just assume... let's just assume that the way they construe it is one of the rational ways of construing it.

Then you must defer to them, don't you?

Mr. Butkin: --I'm not sure.

If I can back on my previous answer, the statute sets up a partnership between the States and the Federal Government.

It's not clear in the statute to whom you defer.

Our feeling in this case, Justice, is that you don't have decide in this case who the senior partner is in that partnership, because no matter who you defer to, the Tenth Circuit should be affirmed.

EPA has consistently interpreted this same standard to mean no new pollutant discharge can reach this river... as recently as year before this very hearing.

Unknown Speaker: Yes, but in this case they said that your water... your water quality standard was not being violated.

Mr. Butkin: Yes, but they applied an entirely different test.

The test they'd always applied previously was--

Unknown Speaker: I know, but they... in this case they construe your standard, and they say it's not being violated.

Mr. Butkin: --That's correct.

Unknown Speaker: And you think... so how do we review that?

As what, arbitrary and capricious or what?

Mr. Butkin: Yes, I think it's arbitrary and capricious to totally abandon your prior interpretations, including the prior interpretation you gave a year previously to a similar discharger in Oklahoma.

And the Chief Judicial Officer of the Environmental Protection Agency construing his authority below said we do not have any authority to balance the interests of Oklahoma and Arkansas.

We do not have any authority to soften this standard, or apply it differently to an Oklahoma discharger as opposed to an Arkansas discharger.

Unknown Speaker: And you say they utterly ignored in making this ruling the fact that phosphorous was getting into your river.

Mr. Butkin: Absolutely.

Unknown Speaker: At the State line.

Mr. Butkin: Absolutely.

And consistent with our own--

Unknown Speaker: And what does phosphorous do for you or against you?

Mr. Butkin: --Phosphorous is a pollutant which creates more algae in a river.

And there was also a finding in this case that phosphorous was the controlling element in this particular river system.

Mr. Butkin: --Yes, but I would caution if that were true in this case, why wouldn't Arkansas want it all?

It would be the same ratio if it were 100 percent of the effluent, the same concentration.

Arkansas deliberately decided to ship half of the entire effluent flow from Fayetteville to Oklahoma.

Unknown Speaker: --Into a more polluted river, I think, yeah.

Well, but we don't... the trouble is we don't know, at least I don't think we know, how it is that the concentration of pollution in Oklahoma gets to be that way.

It may be, for all I know, that Oklahoma is the one that's principally messing up the river.

And therefore, Arkansas might not want it all because its share of the river is cleaner.

And yet it might still be the case, on Justice Stevens' argument, that the amount of extra water that is being discharged along with the 6 pounds of phosphorous would actually effect an improvement of the river once it gets to the dirty section in Oklahoma.

I mean that... and in fact that, at least the latter part of my suggestion, is a claim here, even though there's no finding.

Isn't that true?

Mr. Butkin: There's no finding, and I think, you know, in the Tahlequah situation it was the increased load in and of itself.

EPA's always, until this case, interpreted the standard to mean you just don't add any pollutant load, pounds of pollutants.

Unknown Speaker: Can I ask you one other question?

Mr. Butkin: Yes, sir.

Unknown Speaker: I was reading section 3 of you standards about the anti-degradation policy.

The sentence: no further quality... water quality degradation which would interfere with, and so forth, shall be allowed... this is an Oklahoma command.

Does that mean shall be allowed by any Oklahoma discharger, anyone subject to the Oklahoma?

Mr. Butkin: Yes, and that's--

Unknown Speaker: So that doesn't actually apply to discharges in Arkansas.

Mr. Butkin: --Our federally approved standards are equal... if I understand the question correctly, are equally applicable to all Oklahoma discharges.

Unknown Speaker: Right.

But not to discharges in Arkansas that may find their way into Oklahoma.

Mr. Butkin: Yes, if they violate our standard of the State law.

Unknown Speaker: Then how can Oklahoma issue a rule that says something shall not be allowed in another State?

Mr. Butkin: Because the... as the Environmental Protection Agency and the Tenth Circuit found below, if that something allowed in the other State crosses the Oklahoma State line, we're not talking about viclations of State law, we talking about violations of Federal law.

The statute very clearly says that the Administrator must condition a permit to require compliance with all water quality... federally approved water quality standards, including downstream States.

And any other result would, we feel, and the EPA felt and the Tenth Circuit felt, totally destroy the statutory framework which focuses on clean water.

Unknown Speaker: What if a permit wasn't involved here?

What if Arkansas people, riparian owners, started discharging things into the river.

And... say they just dump phosphorous in the river and it reached Oklahoma.

What could you do about it?

Mr. Butkin: If it's not a point source discharge, we would deal through it not with the permit process, but with the separate part of the program that deals with nonpoint sources.

And Oklahoma and Arkansas recently received a grant to address that problem as well in the same river.

But I'd urge the Court to keep in mind that the statute deals... the part of the statute we're dealing with here is--

Unknown Speaker: Well, you haven't answered my... could Oklahoma do anything about that in my--

Mr. Butkin: --Not through a... possibly through a common law nuisance suit under Arkansas law.

Unknown Speaker: --But that's about it, without having some agreement with Arkansas.

Justices, in addition to... it is true that each case must be decided on its own, but I also feel it's important that EPA be consistent with its interpretations of its standards.

And EPA did depart very dramatically from the interpretations it has provided for and since for this same standard, which says no degradation means no new pollutant mode can enter that river.

But in addition to that, the position taken by the agency below totally destroyed the very purpose and structure of the anti-degradation policy.

The anti-degradation policy is built upon three levels, and at the bottom of those levels, the critical factor is to protect a use of a river... a use for bass, a use for recreation, and so forth.

At the top of the protection, you provide no degradation for Outstanding National Resource waters.

What the EPA did in this case is they said, we'll let more and more and more pollutants in until we see a sign of a loss of use, until we see a sign of a loss of some other protected standard for the river.

And what they did was they basically collapsed that top-tier protection mandated by Federal law for this highest of protected rivers.

Unknown Speaker: Yes, but the other side of the coin, as I understand you, if there's any phosphorous at all, and presumably there's always going to be a little bit left, they can't open a new plant and they can't grant a new permit.

I don't see how they could ever grant a new permit under your rationale.

Mr. Butkin: They can obtain a permit that will not violate our water quality standards.

In the record in this case, there were two alternatives available to Fayetteville that would not have hurt any State's water quality standards.

One of them was land treatment.

Unknown Speaker: But I mean they couldn't discharge any... it could not make a discharge into the river that would have an phosphorous in it whatsoever.

Mr. Butkin: For a river with this protection, if the phosphorous reached the Oklahoma State line.

Unknown Speaker: Well, isn't that... that was your earlier answer.

In other words, you're not saying that they could never discharge into the river.

Mr. Butkin: Right.

Unknown Speaker: You're simply saying the can't discharge if any measurable quantity passes the line into Oklahoma.

Mr. Butkin: That's right.

And it's a Federal program.

The Federal program is designed to set water quality standards at the highest when the lowest common denominator.

301(b)(1)(C), you cannot issue a permit unless a permit applicant can achieve any more stringent or protective requirement required to implement any applicable water quality standard established pursuant to this chapter.

Any applicable water quality standard.

And those would be the standards, of course, of all States that might be impacted by a discharge.

And the contrary ruling would be tremendously detrimental to the purposes of the program.

You'd have a situation... as EPA said consistently below, you'd have a program where polluters would locate just across the State line and dump into interstate rivers and pollute the downstream States.

Unknown Speaker: Mr. Butkin, may I ask you to switch gears for a second, 'cause your time is drawing to a close, And there's something I don't understand.

Section 401 refers to, in at least in what I thought might be the referent to what would be an applicable water quality requirement.

It referred to a series of other statutes, including 1313, which as I understand it, is the section under which water quality standards are promulgated and approved.

Section 402 does not seem to mention 1313 at all.

And it says later on, as you know, in section 402 that this recommendation process is authorized.

Is there any significance to the fact that 1313, referring to water quality standards, is not referenced in 402 with its provision for this process of recommendation and acceptance or rejection?

Mr. Butkin: We think not because 402 requires compliance with section 301; 301 requires compliance with all federally approved water quality standards.

Those are, by definition, the standards approved through section 303.

Unknown Speaker: Okay.

Thank you.

Mr. Butkin: Just as in the Clean Water Act, the Congress, working with the EPA, created a one-way street working entirely towards cleaner water.

A clean water standard is a standard to improve the quality of water, a designated use is a use be achieved through the applicable water quality requirements.

While the Solicitor General is not asking you to affirm the key ruling in the Tenth Circuit, that downstream federally approved water quality standards must be enforced and applied in proceedings, we ask you to affirm that, as EPA below said that was critical to the functioning and survival of the Clean Water Act program.

In this case, I think the Tenth Circuit properly recognized that the administrative law judge had permitted Fayetteville a wrong turn down that one-way street, and we ask that the Tenth Circuit be affirmed.

Thank you.

Chief Justice Rehnquist: Thank you, Mr. Butkin.

I think your time has expired, Mr. Wallace.

The case is submitted.

Unknown Speaker: The honorable court is now adjourned until Monday next at ten o'clock.

Mr. Stevens: The second case is Arkansas against Oklahoma, and Environmental Protection Agency against Oklahoma, it is actually two separate cases covered in one opinion.

Pursuant to the Clean Water Act, the Environmental Protection Agency issued a discharge permit to a new sewage treatment plant in Fayetteville, Arkansas.

Under the permit, the plant was allowed to discharge part of its affluent into the Illinois River about 39 miles upstream from the Arkansas-Oklahoma State line.

In support of the permit, the EPA made a finding that discharges from the plant would not cause a detectable violation of Oklahoma's water quality standards.

Oklahoma challenged that decision and the Court of Appeals ruled that the EPA had erroneously concluded that the plant's discharge would not violate the Oklahoma's standards.

Based on our interpretation of the statute, the regulations in the relevant precedents, we conclude that EPA's application and interpretation of the Oklahoma standard was proper, and that the EPA's issuance of the Fayetteville permit was consistent with its statutory authority, and we therefore reverse the judgment of the Court of Appeals.